Customers increasingly depend on review sites to guide their purchasing decisions. Consequently, the Australian Consumer and Competition Commission (ACCC) has been actively monitoring how businesses use review systems and their potential to mislead consumers. If you are a business operator or manage a review platform, you should understand the extent to which you can solicit or encourage reviews, as well as the potential for users to manipulate reviews on the platform.

Manipulating Reviews

In November 2016, the ACCC took action against Meriton Property Services Pty Ltd (Meriton) alleging that Meriton engaged in misleading and deceptive conduct. Meriton attempted to manipulate reviews of its properties on the TripAdvisor website by reducing the likelihood of users posting negative reviews.

TripAdvisor is a platform for users to post reviews of their stay at a hotel or experience at a restaurant. It includes a star rating system and comment box. A user does not need to prove that they did, in fact, stay at the accommodation they are reviewing. TripAdvisor offers a service to businesses called ‘Review Express’. Here, the hotel supplies the review site with a list of their guests with contact details and TripAdvisor emails the guests to encourage them to leave reviews on the site. TripAdvisor needs to comply with privacy laws and has permission to obtain and share the personal contact details of users.

The ACCC alleged that Meriton manipulated the information guests provided to TripAdvisor to reduce the likelihood of negative reviews and raise the average rating of the properties.

In particular, the consumer watchdog alleged Meriton deliberately provided unusable contact details to TripAdvisor during a period when the property experienced problems such as broken lifts and a lack of hot water. As such, affected customers would not receive reminder emails.

These actions potentially mislead TripAdvisor’s users about the experience of Meriton’s guests over that period. The ACCC are seeking a full range of penalties against Meriton.

Fake Reviews

The ACCC also took action in 2015 against A Whistle & Co (1979) Pty Ltd (A Whistle & Co). In that matter, A Whistle & Co was a franchisor that provided cleaning services trading under the name Electrodry. The franchisor was eager to increase the number and quality of the reviews it received on review sites. The Court found that Electrodry had published six fake testimonials as well as suggested or asked its franchisees to post fake reviews.

In doing so, the franchisees and A Whistle & Co were found to have breached the ACL, which states a business cannot make false or misleading representations that claim to be testimonials.

A Whistle & Co further organised bonuses for customers and internal competitions to encourage posting reviews. The Court accepted that much of the intent behind the scheme was to increase the number of reviews overall. However, it found that some aspects of their plan were potentially misleading. For example, movie ticket giveaways for customers who contacted the franchise with positive feedback.

The Court agreed with the ACCC and granted the following remedies:

  • a declaration that A Whistle & Co breached the ACL;
  • pecuniary penalties (i.e. fine) against A Whistle & Co totalling $215,000;
  • injunctions on their future conduct; and
  • a publication order for corrective notice in a franchising magazine.

The Court also found that posting a review with the purpose of using it to instruct others how to do the same was misleading.

Businesses should avoid asking staff, friends or selected customers to write a review of your product or service that doesn’t reflect their genuine experience. Asking staff or friends to review your products (even if they are real customers) could be misleading as they are likely to be biased in your favour.

Paying for Reviews

Businesses are also increasingly turning to ‘Influencers‘ to promote their goods. If, however, you pay someone to review your brand – either with cash or free merchandise – they must disclose that you paid for the review using hashtags such as #sponsored or #paidpost.

Websites Hosting Online Reviews or Ratings

If you run a marketplace where visitors can view star ratings and reviews, you should be aware of the dangers of manipulated and fake reviews. It’s still unclear whether a website or platform is liable for publishing manipulated or fake ratings and reviews. Sites that facilitate users reviewing and rating goods and services should take active steps to remove misleading and fake online reviews or report them to the ACCC.

Key Takeaways

Online reviews and ratings play a decisive role in consumer decision making. Businesses leverage this tool in their marketing strategies and improve their product or services’ ranking online. In doing so, they must be very careful that they don’t potentially mislead customers through fake reviews or incomplete disclosure.

The ACCC has shown that it is willing to bring proceedings against businesses that make false or misleading representations through testimonials. Marketplaces and other sites hosting online reviews and ratings should be aware of these activities and put in place rules that restrict such behaviour.